Posted by LAP full form is Loan Against Property is a system wherein you get a loan of a pre-decided amount against your personal property or asset mortgaged to the lender. However, the property remains in the borrower’s name for the entire mortgage tenure, so you can use it however you want. You can use your residential or commercial property for this secured loan. The loan amount given to you is determined based on the property you provide for the mortgage.
If you are facing a temporary financial shortage, you can apply for LAP. This type of loan can have multiple purposes ranging from your child’s higher education to expanding your business to organising a grand wedding. Over and above this, the Loan Against Property has many other far-reaching benefits. Let us check these out.
What Are the Benefits of Getting a Loan Against Property?
There are plenty of benefits of LAP, such as:
- Subsidised Borrowing
The lenders under LAP get a right to claim the property if the borrower defaults on the payment. Therefore, the risk factor for a lender in these loans is very low, making it possible for them to offer lower interest rates.
- Bigger Sanction Amount
The market value of your property, whether personal or commercial, will determine the loan amount. In other words, the lender will provide you credit for the amount your property is valued in the market, which can be up to 75%, depending on the property you let out for mortgage.
- Uninterrupted Use of Property
You get to keep the rights over your property even when you have lent it out in mortgage. This way, you can make new use of the property by getting financial liquidity over it while retaining the original usage. This applies to any type of property, be it residential or commercial.
- Prolonged Repayment Tenure
This is one of the best benefits of getting a Loan Against Property. You can get a long-duration repayment period for a larger sum. You can pay this sum of money in up to 10 years. While the exact tenure is different from lender to lender, you can still opt for monthly instalments that will be pocket friendly. This can be helpful, especially for small business owners.
What Are the Tips for Getting Approved for a Loan Against Property?
While LAP offers certain benefits, getting approved for such a loan might be hard at times. Here are a few tips you could inevitably follow for successful approval:
- Fulfil all the eligibility criteria and provide correct documents for the usage of the lender. This is the first step and will create a lasting impression and get your lender to trust you, so make it precise and efficient.
- Find a co-borrower for the loan. This will allow you space for a higher amount and will build the trust of your lender for the loan repayment strongly.
- Keep your bank account history up to date and check it before applying for LAP. Lenders check your bank account statements from the past to ensure your financial history is solid and trustworthy. Build your credibility by staying on top of it.
- Talk to the loan department of your lending institution or NBFC before going further. If any documents are missing, show them the necessary proof and explain the actual scenario.
To Sum Up
As we discussed, there are many benefits of loan against property. If you are looking for such a secured loan, ensure you fulfil all the necessary criteria. Over and above this, to get the loan conditioned to your terms, follow the mentioned tips, and get the maximum benefits from LAP. Obtaining this loan will provide you with the freedom to use the money in the way you want while having ownership of your mortgaged property.